Survey Finds IT Salaries Higher, Morale Low

An overwhelming majority of companies continue to pay IT employees as much as 20% more than their non-technical counterparts, according to META Group’s annual 2004 IT Staffing and Compensation Guide.

“In overall terms, what I see is that things are pretty consistent with last year in terms of where we are now, but there’s some optimism going forward here, said Maria Schafer, a senior program director of META Group’s Executive Directions advisory service and author of its Compensation Guide.

“I think that what is occurring is it’s difficult right now for people who are caught in the slow-to-change portion of the job market here to feel that there’s a lot of positive stuff out there,” she said. “But if you’ve got the right skills, you’ve got a totally different perception of what’s been going on.”

Schafer also found that despite the substantial publicity concerning the outsourcing and offshoring of highly skilled IT jobs, demand for certain IT skill sets remains strong and that most companies are not shipping lots of jobs overseas or even to U.S. outsourcers and contractors.

Fully one quarter of this year’s respondents said they are not engage in any outsourcing at all compared with 37% in 2003.

Skills In Demand

As was the case last year and the year before, this year’s respondents indicate a continuing need for Internet-related capabilities, including application development (15% of respondents), Java application management (15% of respondents), and networking (11% of respondents).

Demand for e-commerce skills lessened this year, with only 15% of respondents indicating a strong need, as opposed to 22% last year and 25% in 2002.

“Universities like MIT have made significant strides in maintaining a steady stream of students with these specific skills in today’s workforce,” said Thomas Malone, professor of management at the MIT Sloan School of Management and author of the book The Future of Work. “However, the consistency with which these skill sets are identified in META Group’s study is a strong indicator that even more could be done to develop these capabilities.”

Schafer points out the same skills have been in demand year-after-year and this indicates companies are doing little to address this issue long-term. India, for example, turns out over 500,000 computer-related graduates every year compared to 30,000 in the U.S.

The report also found:

  • A consensus that the worst may be over yet that is not translating into substantially different business practices than those of the past several years. Therefore, hiring levels remain relatively stagnant;
  • that although the issue of offshore sourcing has become a major political and media focus, the reality is that relatively few organizations have large numbers of IT employees sited offshore;
  • that morale is at an all-time low in IT organizations, with 72% of organizations indicating they have a morale problem.
  • more than 76% of companies indicated they continue to pay IT employees higher salaries, and 45% of companies claim to be paying premiums for critical skills because IT organizations are finding them so difficult to locate and retain.
  • This year’s report is based on compensation and best-practice surveys of more than 650 large and midsize companies spanning 14 industries and over 40 geographic markets.